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Chesapeake Drills First Gas Well Under Lowe's Farm

Chesapeake Energy set back up on the Keep A Stepping Gas Well site east of Lowe’s Farm right after New Year’s Day 2010.  The well that Chesapeake is drilling (1H West) will go under Lowe’s Farm as shown in Plat 1 below.  Drilling is expected to take 30-35 days and the well will run approximately 7000ft below the surface.

Minerals under Lowe’s Farm HOA will participate in a “unit” called “Keep A Steppin West”.  The Plat 1 and 2 show that all lots in Lowe’s Farm as well as some other acreage around Lowe’s Farm totaling 280 acres is included in this unit.  Chesapeake Energy and Carrizo Oil formed a partnership to produce the minerals from this unit from an existing Chesapeake pad site known as “Keep A Steppin.”  All production from within the unit is split proportionally among the mineral owners in the unit.  Thus, even though this first gas well is being drilled on the north-east side of Lowe’s Farm, production is split proportionally regardless of whether the owner lives on Westridge or lives on Rosebriar directly above well 1H.

 

The shaded lots in Plat 1 (there are 24 of them) indicate the owners that did not sign a gas lease as of September 11, 2009 when the plat was submitted to the Texas Railroad Commission.  The list of homeowners in the Keep A Steppin West Pooling Area can be found in the Certificate of Pooling P-12 document below that was submitted to the Texas Railroad Commission on Sept. 11, 2009.  All of the documents below are public documents available on the Texas Railroad Commission's website.  It’s the Board’s understanding that the Texas Railroad Commission does not require every lot in a unit to be leased before drilling can occur.  Chesapeake has received a drilling permit that meets these requirements.

 

 If you didn’t sign your gas lease, Chesapeake has indicated that owners still have an opportunity to contact Woodstone Resources regarding a lease:   

 

Leah Baker                                                                                                Rail Road Commission Documents, 1H West
Woodstone Resources, L.L.C.                                                           Plat 1 - Shows Bore Path
7500 San Felipe Street, Suite 475                                                  
 Plat 2 - Shows Lots In Pooling Area
Houston, Texas 77063                                                                         
Certificate of Pooling P-12
Phone (713) 706-3090                                                                         
Unleased Tracts On Sept. 11, 2009
                                                                                                                      Drilling Permit from RRC
                                                                                                                      GIS - Wells Near Lowe's Farm (Jan 2010)

When will I start receiving royalty payments?  At this time, Chesapeake doesn’t have a projection on this.  After drilling, the well still has to be frac’d and a pipeline installed to take gas from the Keep A Steppin Pad site to the existing natural gas distribution system.  Neither the frac pond nor the distribution pipeline have been constructed as of January 2010.  If you recall, Chesapeake drilled two other wells from this pad site in the first part of 2009 under MISD property, but neither have been frac’d either.  Once the wells are frac’d and they start producing, royalty payments will likely begin within 4 months.  It is possible that other wells will be drilled under the Keep A Steppin West unit but Chesapeake will not comment on this though, so it could be a number of months or years away if at all. 

Posted By Paul Blevins, January 16, 2010


Chesapeake Completes First Gas Well Drilling Dec. 5th

Chesapeake Energy informed the Lowe's Farm Board of Directors that they have completed drilling on their first gas well on the site located next to Lowe's Farm and will move the drilling rig offsite during the weekend of December 6th.  Chesapeake had originally planned to drill two wells back to back on this site, but drilling needs elsewhere forced them to move the drilling rig offsite.  However, Chesapeake has to drill the next gas well within 120 days in order to comply with their legal requirements.  Thus, Chesapeake should be back by mid-April to drill the second well. 

Posted By Paul Blevins, December 5, 2008


Chesapeake Gas Well Activities Start Nov. 4, 2008

The Lowe's Farm Board of Directors met with a representative of Chesapeake Energy on October 9th after finding out that Chesapeake Energy was planning to drill on the gas well site that Carrizo Oil had received approval on from the City of Mansfield in the Fall of 2007. Chesapeake Energy holds the mineral leases on the MISD properties and since those leases were about to expire on November 12th, Chesapeake needed to take immediate action to drill before the leases lapsed. As such, Chesapeake will drill two wells on the same Carrizo approved pad site starting November 12th. Homeowners can expect to see a flurry of activity starting November 4th as Chesapeake moves equipment in to start drilling by November 12th. The access road to the drill site will connect with Broad Street directly across from the Inglesia church next to Lowe's Farm. The road will run right next to the Danny Jones property line and the drill site is located behind the tree line that you can see as you drive along Broad Street in front of Lowe's Farm. See the attached Chesapeake Site Plan that shows the drill site in relation to the tree line and Lowe's Farm or the original site plan that was submitted to the City of Mansfield for the drilling permit. Click here for full Chesapeake Presentation to Lowe's Farm Board of Directors or click here for a link to Chesapeake's Mansfield, Texas home center page for current drilling status information.

Starting November 4th and continuing for approximately two weeks, there will be numerous trucks in and out of the well site as Chesapeake starts drilling. After this time, it will take approximately 20-30 days for each well to be drilled. The two wells are being drilled back to back, so the second well will be immediately drilled after the first one is completed. Thus, around the first of the year the second well should be completed and the drilling rig will move offsite. During this timeframe, homeowners can again expect to see numerous trucks in and out of the wellsite as the equipment is removed. At some point shortly thereafter, fracing equipment will be brought onsite to frac each wellhead. This process will take approximately 2 weeks total before the equipment is removed. Since the drill site is located over 1000ft from any home in Lowe's Farm and from any building on the MISD campus, Chesapeake has no plans to provide sound walls at this time. However, sound engineers from Chesapeake are required to take decibel level readings to ensure that the sound level is within 3dB and 5dB of pre-drilling sound levels in order to comply with ordinance requirements.

As far as drilling under Lowe's Farm is concerned, Chesapeake could not offer any information on this to the Board. As far as the Board knows, Carrizo Oil still holds the gas lease for any Lowe's Farm homeowner who signed their lease agreements. Drilling to reach natural gas under Lowe's Farm is still likely to originate from the same gas well site that Chesapeake is drilling their two wells on. Woodstone Resources has indicated that mineral rights leased on the 128 acre Barksdale property adjacent to Lowe's Farm lapsed and Chesapeake purchased them. The Board does now know how long of a lease Mrs. Barksdale signed with Chesapeake but understands from Woodstone that the previous lease with Carrizo was less than 2 years. As such, Chesapeake may come back at a later date to drill more wells, but not under Lowe's Farm unless a gas lease swap is negotiated with Carizzo. Since the expiration of signed gas leases typically spurs drilling activities (such as what is happening in the above situation) it is likely that drilling under Lowe's Farm will still be another 2-3 years away since our gas leases were for five years and most residents signed leases in the fall of 2006. However, drilling might occur earlier if Mrs. Barksdale's lease with Chesapeake is less than 2 years.

At present, Woodstone Resources says that Carrizo is still honoring any lease agreements that are still outstanding (not signed). However, if you have read recent articles in the Star Telegram, a lot of energy companies are rescinding leases they had mailed out and stopping drilling activities altogether. Additionally, lease signing bonuses have dropped significantly due to the dramatic drop in natural gas prices. Current lease signing bonuses are going for $5,000 per acre in the higher production areas to the north of us instead of the $30,000 per acre range that you heard about only a month ago. This is all due to the economic downturn and also the recent dramatic drop in natural gas prices on the spot market. A number of energy companies are being squeezed out by the credit crisis and there is likely to be considerable consolidation in this sector in the months to come.

The bottom line for Lowe's Farm Homeowners is that other than Chesapeake Energy drilling their two natural gas wells now, very little has changed for Lowe's Farm Homeowners who have already signed a gas lease. More than likely, it will remain quiet until it gets closer to the expiration of our gas leases or until Chesapeake makes "swap" arrangements with Carrizo to drill more wells under the Barksdale property and Lowe's Farm.

 

Will Carrizo rescind any unsigned leases with Lowe's Farm homeowners?

The Board has no information on this to comment.

What should you do if you have not signed your natural gas lease? Should I sign a lease or not? This is a personal decision that the Board cannot advise you on. If you have not received a lease package and/or are interested in getting one, please contact Woodstone Resources below.

 

What can I do if I have already signed my gas lease? 

If you lease is already signed, it's simply a waiting game to see if drilling will occur before your lease expires.  If the Fall of 2011 arrives and no gas wells have been drilled under Lowe's Farm, then most homeowner's gas leases will expire then. The Board would likely look at representing the community as a whole to various energy companies similar to how many other neighborhoods have joined together over the past year to obtain better leverage on signing bonuses. But this is several years away and a lot can change between now and then.

Just now reading this and wishing you had know about this earlier?  Add your Email address to our Blast list and you will be automatically updated by Email on important events that affect Lowe's Farm Homeowners.  Sign up by Emailing news@lowesfarmhoa.com and you will be the first to find out information that affects you.

Posted By Paul Blevins, President of Lowe's Farm HOA, October 22, 2008


Woodstone Resources, LLC Contact Information

If you have questions about your existing mineral lease, or you would like to find
out more about signing a lease with with Woodstone Resources, please use the
contact in formation below:

Leah Baker
Woodstone Resources, L.L.C.
7500 San Felipe Street, Suite 475
Houston, Texas 77063
Phone (713) 706-3090
Fax (713) 706-3490

NOTE:  While the HOA Board is in support of Woodstone Resources LLC and has
executed a lease agreement for all HOA-owned common area property in Lowe's
Farm, the HOA board cannot offer specific advice to members concerning natural
or mineral resource leases.  


City of Mansfield Approves Drill Site 

The Surface Use Permit for the Gas Well that is related to the leases many resident's of
Lowe's Farm have signed has been approved by the Mansfield City Council.  Carrizo Oil still has not determined the exact lots that will be offered lease, but this is the first step of the permit process that will lead to that determination. If you have any questions, contact Woodstone at the number on your documentation. The HOA cannot offer advice on oil & gas leases.

CITY OF MANSFIELD

Legislative File Number 07-0434 (version 1)

Title
Ordinance - Public Hearing and First Reading on an Ordinance Approving a Specific Use Permit
for Gas Well Drilling and Production on Approximately 10.13 Acres on Property Located at 3800
East Broad Street; Carrizo Oil & Gas (ZC#07-010)

Description/History
The drill site is located within a lease area of approximately 131.7 acres of vacant property,
although only 10.2 acres will be used for surface operations. The 131.7 acre tract is currently
zoned PR, Pre-Development and is designated for single family residential use in the Future

Land Use Plan.

The proposed drill site meets the minimum required setback from the nearest residential
property line and residential structure. The site is south of the Lowe’s Farm subdivision and
north east of the Meadow Glen subdivision. The drill site will be approximately 1,000 feet from
the Danny Jones Middle School building and approximately 1,076 feet from the Mary Lillard
Intermediate School building.

The applicant plans to drill up to eight wells at the rate of one well every two months. Vehicular
access to the drill site will be via S.H. 360 to east on East Broad Street to the access road to the
site.

The site plan and accompanying data has been reviewed by the Planning, Engineering and Fire
Departments. A typical layout of the facilities and structures located at the drill and operation
sites has been shown on the site plan. The actual location of the facilities and structures within
the approved boundary may vary, depending on individual site condition.

If the SUP is approved by City Council, the applicant must also obtain a Gas Well Permit and be
subject to a series of inspections by the City’s gas well inspector.

Funding Source

Not applicable.

Recommendation

The Planning and Zoning Commission held a public hearing on July 2, 2007 and voted 5 to 1 to
recommend approval. Commissioner Ambrose voted nay, expressing a concern about the
ability to evacuate the nearby school buildings during an emergency involving the gas wells.

Prepared By

Felix Wong, Director of Planning

Justification

See information above.

Requested Action

To consider the subject request for Specific Use Permit.

Additional Documents:

Maps and Supporting Information
Ordinance with Exhibits A & B

 



 

This page was updated on 01/16/2010
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